New Delhi

Gold and silver prices are expected to remain elevated in the near term as global uncertainties continue to fuel safe-haven demand, unless sustained peace emerges and ongoing trade tensions are resolved, the Economic Survey 2025–26 said on Thursday.

The Survey noted that both precious metals scaled record highs during 2025, reflecting heightened geopolitical risks, financial market volatility and persistent investor demand for assets perceived as stores of value.

According to the Survey, the surge in gold and silver prices was supported by a weakening US dollar, expectations of prolonged negative real interest rates, and increasing concerns over geopolitical and macro-financial tail risks.

“Prices of precious metals such as gold and silver are likely to remain firm, driven by their continued appeal as safe-haven investments amid global uncertainty, unless lasting peace is established and trade-related frictions ease,” the Survey, tabled in Parliament, stated.

On the Multi Commodity Exchange (MCX), silver futures breached the Rs 4 lakh per kilogram mark on Thursday after surging 6.3 per cent, while gold prices climbed to a fresh all-time high of Rs 1.8 lakh per 10 grams.

However, the Survey pointed out that some market participants believe the sharp rally witnessed in 2025 may not be fully sustainable over the longer term.

As of December 31, 2025, gold prices on the MCX stood at Rs 1,39,201 per 10 grams, while silver settled at Rs 2,35,701 per kilogram. In retail markets, gold and silver closed at Rs 1,37,700 per 10 grams and Rs 2,39,000 per kilogram, respectively, at the end of the previous year.

The Survey highlighted that India’s import basket in FY25 continued to be led by petroleum crude, gold and petroleum products, which together accounted for more than one-third of total imports. Gold imports recorded a year-on-year increase of 27.4 per cent.

This rise was attributed primarily to a sharp increase in global gold prices, which climbed 38.2 per cent on a year-on-year basis, alongside strong domestic demand, the Survey said.

On the external sector front, foreign currency assets (FCA), which constitute the most liquid portion of India’s foreign exchange reserves, declined marginally from USD 567.6 billion at the end of March 2025 to USD 560.5 billion as of January 16, 2026.

In contrast, the value of gold held in reserves rose significantly to USD 117.5 billion as of January 16, 2026, compared to USD 78.2 billion at the end of March 2025.

The Survey attributed this increase to valuation gains amid high global gold prices and a growing preference among central banks to diversify reserves away from dollar-denominated assets.

The expanding share of gold in foreign exchange reserves mirrors a global trend, particularly among emerging market economies, where gold holdings have risen in response to geopolitical tensions and shifts in the global interest rate environment.

In international markets, gold prices jumped sharply from USD 2,607 per ounce to USD 4,315 per ounce during 2025, marking one of the steepest annual increases in recent history, the Survey said.

Meanwhile, prices of base metals such as iron, copper and aluminium are projected to rise at a more moderate pace. Copper prices are expected to remain firm, supported by strong demand from green energy technologies and data centres, along with supply-side disruptions.

However, citing the World Bank’s Commodity Prices Outlook (October 2025), the Survey noted that global commodity prices are projected to decline by about 7 per cent in FY27, largely due to lower crude oil prices resulting from excess supply.

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It cautioned, however, that geopolitical developments could pose risks to this outlook.